GBPJPY rebounded from the almost one-year low of 139.88 that it recorded on August 15 and challenged the 20-simple moving average (SMA) in the 4-hour chart. However, the pair pared some of Thursday’s gains and the momentum indicators are supportive of a weakening picture.
The RSI indicator is moving slightly lower in the negative territory, while the %K line of the stochastic oscillator created a bearish crossover with the %D line in the middle area.
Should the market fail to jump above the 20-SMA and moves lower, support could be met at the 139.88 bottom. A significant leg below this area could send prices towards the 139.30 barrier, taken from the low on August 2017. Then, if the market slips below this zone, the next stop could be at the 138.65 level, identified by lows June 2017.
On the flip side, if a 4-hour candle closes above the 20-SMA, immediate resistance could be met at the 40-SMA first at 141.46, and then at the 141.75 obstacle. Additionally, more gains could drive the price north towards the 23.6% Fibonacci retracement level of the downleg from 149.30 to 139.88, near 142.10.
To sum up, looking at longer timeframes, GBPJPY has been developing in a downtrend since July 16, after the pullback from the 149.30 hurdle.
